Customer Retention
Customer Retention marketing is a tactically-driven approach based on customer behavior. It's the core activity going on behind the scenes in Relationship Marketing, Loyalty Marketing, Database Marketing, Permission Marketing, and so forth. Here’s the basic philosophy of a retention-oriented marketer:
1. Past and Current customer behavior is the best predictor of Future customer behavior. Think about it. In general, it is more often true than not true, and when it comes to action-oriented activities like making purchases and visiting web sites, the concept really shines through.
We are talking about actual behavior here, not implied behavior. Being a 35-year-old woman is not a behavior; it’s a demographic characteristic. Take these two groups of potential buyers who surf the ‘Net:
• People who are a perfect demographic match for your site, but have never made a purchase online anywhere
• People who are outside the core demographics for your site, but have purchased repeatedly online at many different web sites
If you sent a 20% off promotion to each group, asking them to visit and make a first purchase, response would be higher from the buyers (second bullet above) than the demographically targeted group (first bullet above). This effect has been demonstrated for years with many types of Direct Marketing. It works because actual behavior is better at predicting future behavior than demographic characteristics are. You can tell whether a customer is about to defect or not by watching their behavior; once you can predict defection, you have a shot at retaining the customer by taking action.
2. Active customers are happy (retained) customers; and they like to "win." They like to feel they are in control and smart about choices they make, and they like to feel good about their behavior. Marketers take advantage of this by offering promotions of various kinds to get consumers to engage in a behavior and feel good about doing it.
These promotions range from discounts and sweepstakes to loyalty programs and higher concept approaches such as thank-you notes and birthday cards. Promotions encourage behavior. If you want your customers to do something, you have to do something for them, and if it’s something that makes them feel good (like they are winning the consumer game) then they’re more likely to do it.
Retaining customers means keeping them active with you. If you don't, they will slip away and eventually no longer be customers. Promotions encourage this interaction of customers with your company, even if you are just sending out a newsletter or birthday card.
The truth is, almost all customers will leave you eventually. The trick is to keep them active and happy as long as possible, and to make money doing it.
3. Retention Marketing is all about:
Action – Reaction – Feedback – Repeat.
Marketing is a conversation, as the ClueTrain Manifesto and Permission Marketing have pointed out. Marketing with customer data is a highly evolved and valuable conversation, but it has to be back and forth between the marketer and the customer, and you have to LISTEN to what the customer is saying to you.
For example, let's say you look at some average customer behavior. You look at every customer who has made at least 2 purchases, and you calculate the number of days between the first and second purchases. This number is called "latency" - the number of days between two customer events. Perhaps you find it to be 30 days.

Now, look at your One-Time buyers. If a customer has not made a second purchase by 30 days after the first purchase, the customer is not acting like an "average" multi-purchase customer. The customer data is telling you something is wrong, and you should react to it with a promotion. This is an example of the data speaking for the customer; you have to learn how to listen.
This site and the Drilling Down book are all about how to discover, manage, and listen to customer data. The data is speaking for the customer, telling you by its very existence (or non-existence) there has been an action (or non-action) waiting for a reaction.
4. Retention Marketing requires allocating marketing resources. You have to realize some marketing activities and customers will generate higher profits than others. You can keep your budget flat or shrink it while increasing sales and profits if you continuously allocate more of the budget to highly profitable activities and away from lower profit activities. This doesn't mean you should "get rid" of some customers or treat them poorly.
It means when you have a choice, as you frequently do in marketing, instead of spending the same amount of money on every customer, you spend more on some and less on others. It takes money to make money. Unless you get a huge increase in your budget, where will the money come from?
For example, let's say you have 1,000 customers, and you have an annual budget of $1,000. You spend $1 on each customer each year, and for that $1, you get back $1.10 in profits. That's an ROI of 10%; you got back $1,100 for spending $1,000.

Now, what if you knew spending $2 each year on a certain 50% of customers would bring back $8 in profits. That's a 400% ROI. Where do you get the extra $1? You take it away from the other 50% of customers. You spend the same $1,000 total and you make back 500 (half the customers) x $8 = $4,000.
If you always migrate and reallocate marketing dollars towards higher ROI efforts, profits will grow even as the marketing budget stays flat.
You have to develop a way to allocate resources to the most profitable promotions, deliver them to the right customer at the right time, and not waste time and money on unprofitable promotions and customers. This is accomplished by using the data customers create through their interactions with you to build simple models or rules to follow. These models are your listening system, like the "30 day latency" model above. They allow the data to speak to you about the customer.
This site and the Drilling Down book are about teaching you how to build and use these models yourself in 30 minutes with an Excel spreadsheet. If you want to increase sales while reducing the costs of marketing to customers, you have to get this book.

Encyclopedia on

Customer retention
From Wikipedia, the free encyclopedia
Customer Retention is the activity that a selling organization undertakes in order to reduce customer defections. Successful customer retention starts with the first contact an organisation has with a customer and continues throughout the entire lifetime of a relationship. A company’s ability to attract and retain new customers, is not only related to its product or services, but strongly related to the way it services its existing customers and the reputation it creates within and across the marketplace.
Customer retention is more than giving the customer what they expect, it’s about exceeding their expectations so that they become loyal advocates for your brand. Creating customer loyalty puts ‘customer value rather than maximizing profits and shareholder value at the center of business strategy’.[1] The key differentiator in a competitive environment is more often than not the delivery of a consistently high standard of customer service.
Customer retention has a direct impact on profitability. Research by John Fleming and Jim Asplund indicates that engaged customers generate 1.7 times more revenue than normal customers, while having engaged employees and engaged customers returns a revenue gain of 3.4 times the norm.

How to Retain Customer Why is it Necessary.

Customer retention is very important because acquiring a new customer is far more expensive than keeping an existing one. This is even more true if the market operating is saturated or saturating as in mobile telecommunication industry. Retention is important to most businesses because the cost of acquiring new customers is much greater than the cost of keeping good relationship with current customers. Note that management of customer attrition is very important part of customer lifecycle management - CLM

The single most important thing in customer retention is to understand your customers well enough: customers' expectations, satisfaction, demographic & geographic & psychographic customer tendencies, etc. If you understand more about customers and know more about which customer groups are defecting to rival providers, more effective retention strategies can be developed. This is the key to the successful retention marketing!.

?Explain the various leadership styles and their sailent features.
Which leadership style is the best?Justify.

ANS:

Leadership Styles
From Mahatma Gandhi to Winston Churchill to Martin Luther King, there are as many leadership styles as there are leaders. Fortunately, businesspeople and psychologists have developed useful and simple ways to describe the main styles of leadership, and these can help aspiring leaders understand which styles they should use.
So, whether you manage a team at work, captain a sports team, or lead a major corporation, which approach is best? Consciously, or subconsciously, you'll probably use some of the leadership styles in this article at some point. Understanding these styles and their impact can help you develop your own, personal leadership style – and help you become a more effective leader.
With this in mind, there are many different frameworks that have shaped our current understanding of leadership, and many of these have their place, just as long as they're used appropriately. This article looks at some of the most common frameworks, and then looks at popular styles of leadership.
Leadership Theories
Researchers have developed a number of leadership theories over the years. These fall into four main groups:
1. Behavioral theories – What does a good leader do?
Behavioral theories focus on how leaders behave. Do they dictate what needs to be done and expect cooperation? Or do they involve the team in decisions to encourage acceptance and support?
In the 1930s, Kurt Lewin developed a leadership framework based on a leader's decision-making behavior. Lewin argued that there are three types of leaders:
1. Autocratic leaders make decisions without consulting their teams. This is considered appropriate when decisions genuinely need to be taken quickly, when there's no need for input, and when team agreement isn't necessary for a successful outcome.
2. Democratic leaders allow the team to provide input before making a decision, although the degree of input can vary from leader to leader. This type of style is important when team agreement matters, but it can be quite difficult to manage when there are lots of different perspectives and ideas.
3. Laissez-faire leaders don't interfere; they allow people within the team to make many of the decisions. This works well when the team is highly capable and motivated, and when it doesn't need close monitoring or supervision. However, this style can arise because the leader is lazy or distracted, and, here, this approach can fail.
Similar to Lewin's model, the Blake-Mouton Managerial Grid helps you decide how best to lead, depending on your concern for people versus your concern for production. The model describes five different leadership styles: impoverished, country club, team leader, produce or perish, or middle of the road. The descriptions of these will help you understand your own leadership habits and adapt them to meet your team's needs.
Clearly, then, how leaders behave impacts on their effectiveness. Researchers have realized, though, that many of these leadership behaviors are appropriate at different times. So, the best leaders are those who can use many different behavioral styles and use the right style for each situation.
2. Contingency theories – How does the situation influence good leadership?
The realization that there isn't one correct type of leader led to theories that the best leadership style is contingent on, or depends on, the situation. These theories try to predict which leadership style is best in which circumstance.
When a decision is needed fast, which style is preferred? When the leader needs the full support of the team, is there a better way to lead? Should a leader be more people oriented or task oriented? These are all examples of questions that contingency leadership theories try to address.
A popular contingency-based framework is the Hersey-Blanchard Situational Leadership Theory, which links leadership style with the maturity of individual members of the leader's team.
3. Trait theories – What type of person makes a good leader?
Trait theories argue that leaders share a number of common personality traits and characteristics, and that leadership emerges from these traits. Early trait theories promoted the idea that leadership is an innate, instinctive quality that you either have or don't have. Thankfully, we've moved on from this approach, and we're learning more about what we can do as individuals to develop leadership qualities within ourselves and others.
What's more, traits are external behaviors that emerge from things going on within the leader's mind – and it's these internal beliefs and processes that are important for effective leadership.
Trait theory does, however, help us identify some qualities that are helpful when leading others and, together, these emerge as a generalized leadership style. Examples include empathy, assertiveness, good decision-making, and likability. In our article Building Tomorrow's Leaders, we discuss a series of attributes that are important for all types of leaders to develop. However, none of these traits, nor any combination of them, will guarantee success as a leader. You need more than that.
4. Power and influence theories – What is the source of the leader's power?
Power and influence theories of leadership take an entirely different approach. They're based on the different ways in which leaders use power and influence to get things done, and the leadership styles that emerge as a result. Perhaps the most well known of these theories is French and Raven's Five Forms of Power. This model distinguishes between using your position to exert power, and using your personal attributes to be powerful.
French and Raven identified three types of positional power – legitimate, reward, and coercive – and two sources of personal power – expert and referent (your personal appeal and charm). The model suggests that using personal power is the better alternative and, because Expert Power (the power that comes with being a real expert in the job) is the most legitimate of these, that you should actively work on building this. Similarly, leading by example is another highly effective way to establish and sustain a positive influence with your team.
Another valid leadership style that's supported by power and influence theories isTransactional Leadership. This approach assumes that work is done only because it is rewarded, and for no other reason, and it therefore focuses on designing tasks and reward structures. While it may not be the most appealing leadership strategy in terms of building relationships and developing a long-term motivating work environment, it does work, and it's used in most organizations on a daily basis to get things done.
An Up-to-Date Understanding of Leadership
Within all of these theories, frameworks, and approaches to leadership, there's an underlying message that leaders need to have a variety of factors working in their favor. Effective leadership is not simply based on a set of attributes, behaviors, or influences. You must have a wide range of abilities and approaches that you can draw upon.
Having said this, however, there's one leadership style that is appropriate in very many corporate situations – that of Transformational Leadership. A leader using this style:
• Has integrity.
• Sets clear goals.
• Clearly communicates a vision.
• Sets a good example.
• Expects the best from the team.
• Encourages.
• Supports.
• Recognizes good work and people.
• Provides stimulating work.
• Helps people see beyond their self-interests and focus more on team interests and needs.
• Inspires.
In short, transformational leaders are exceptionally motivating, and they're trusted. When your team trusts you, and is really "fired up" by the way you lead, you can achieve great things!

The transformational leadership style is the dominant leadership style taught in our How to Lead: Discover the Leader Within You program, although we do recommend that other styles are brought in as the situation demands.

Having said that Transformational Leadership suits very many circumstances in business, we need to remember that there may be situations where it's not the best style. This is why it's worth knowing about the other styles shown below so that you have a greater chance of finding the right combination for the situation you find yourself in.
Popular Leadership Styles – A Glossary
The leadership theories and styles discussed so far fit within formal theoretical frameworks. However, many more terms are used to describe leadership styles, even if these don't fit within a particular system. It's worth understanding these!

1. Autocratic leadership
Autocratic leadership is an extreme form of transactional leadership, where leaders have absolute power over their workers or team. Staff and team members have little opportunity to make suggestions, even if these would be in the team's or the organization's best interest.
Most people tend to resent being treated like this. Therefore, autocratic leadership often leads to high levels of absenteeism and staff turnover. However, for some routine and unskilled jobs, the style can remain effective because the advantages of control may outweigh the disadvantages.
2. Bureaucratic leadership
Bureaucratic leaders work "by the book." They follow rules rigorously, and ensure that their staff follows procedures precisely. This is a very appropriate style for work involving serious safety risks (such as working with machinery, with toxic substances, or at dangerous heights) or where large sums of money are involved (such as handling cash).
3. Charismatic leadership
A charismatic leadership style can seem similar to transformational leadership, because these leaders inspire lots of enthusiasm in their teams and are very energetic in driving others forward. However, charismatic leaders can tend to believe more in themselves than in their teams, and this creates a risk that a project, or even an entire organization, might collapse if the leader leaves. In the eyes of the followers, success is directly connected to the presence of the charismatic leader. As such, charismatic leadership carries great responsibility, and it needs a long-term commitment from the leader.
4. Democratic leadership or participative leadership
Although democratic leaders make the final decisions, they invite other members of the team to contribute to the decision-making process. This not only increases job satisfaction by involving team members, but it also helps to develop people's skills. Team members feel in control of their own destiny, so they're motivated to work hard by more than just a financial reward.
Because participation takes time, this approach can take longer, but often the end result is better. The approach can be most suitable when working as a team is essential, and when quality is more important than speed to market, or productivity.
5. Laissez-faire leadership
This French phrase means "leave it be," and it's used to describe leaders who leave their team members to work on their own. It can be effective if the leader monitors what's being achieved and communicates this back to the team regularly. Most often, laissez-faire leadership is effective when individual team members are very experienced and skilled self-starters. Unfortunately, this type of leadership can also occur when managers don't apply sufficient control.
6. People-oriented leadership or relations-oriented leadership
This is the opposite of task-oriented leadership. With people-oriented leadership, leaders are totally focused on organizing, supporting, and developing the people in their teams. It's a participative style, and it tends to encourage good teamwork and creative collaboration.
In practice, most leaders use both task-oriented and people-oriented styles of leadership.
7. Servant leadership
This term, created by Robert Greenleaf in the 1970s, describes a leader who is often not formally recognized as such. When someone, at any level within an organization, leads simply by meeting the needs of the team, he or she is described as a "servant leader."
In many ways, servant leadership is a form of democratic leadership, because the whole team tends to be involved in decision making.
Supporters of the servant leadership model suggest that it's an important way to move ahead in a world where values are increasingly important, and where servant leaders achieve power on the basis of their values and ideals. Others believe that in competitive leadership situations, people who practice servant leadership can find themselves left behind by leaders using other leadership styles.
8. Task-Oriented leadership
Highly task-oriented leaders focus only on getting the job done, and they can be quite autocratic. They actively define the work and the roles required, put structures in place, plan, organize, and monitor. However, because task-oriented leaders don't tend to think much about the well-being of their teams, this approach can suffer many of the flaws of autocratic leadership, with difficulties in motivating and retaining staff.
9. Transactional leadership
This style of leadership starts with the idea that team members agree to obey their leader totally when they accept a job. The "transaction" is usually the organization paying the team members in return for their effort and compliance. The leader has a right to "punish" team members if their work doesn't meet the pre-determined standard.
Team members can do little to improve their job satisfaction under transactional leadership. The leader could give team members some control of their income/reward by using incentives that encourage even higher standards or greater productivity. Alternatively, a transactional leader could practice "management by exception" – rather than rewarding better work, the leader could take corrective action if the required standards are not met.
Transactional leadership is really a type of management, not a true leadership style, because the focus is on short-term tasks. It has serious limitations for knowledge-based or creative work, however it can be effective in other situations.
10. Transformational leadership
As we discussed earlier, people with this leadership style are true leaders who inspire their teams constantly with a shared vision of the future. While this leader's enthusiasm is often passed onto the team, he or she can need to be supported by "detail people." That's why, in many organizations, both transactional and transformational leadership are needed. The transactional leaders (or managers) ensure that routine work is done reliably, while the transformational leaders look after initiatives that add new value.